Senators Bob Corker, Jeff Flake and John McCain talk a big game about not letting the GOP be the handmaiden of trumpist corruption, but when the chips were down last night, they voted with their party and a tie-breaking vote from Vice President Handmaid's Tale to pass legislation that lets financial institutions take away your right to sue them when they defraud you.
The legislation, which passed last night, nullifies the Consumer Financial Protection Bureau's rule that bans "binding arbitration" clauses from financial terms of service. These clauses force the public into a tilted, parallel justice system where the deck is stacked against them.
In particular, these clauses ban the kinds of class-action suits that make it worth top lawyers' time to sue deep-pocketed, well-represented blue-chip firms that commit petty thefts against millions of people, no one of whom is worth representing.
With the CFPB rule dead, Equifax, Wells Fargo, and other mass-scale crooks can rip off the public with total impunity.
First, Office of the Comptroller of the Currency head Keith Noreika, himself a former defense lawyer for Wells Fargo who tried to push class-action suits into arbitration, argued the rule posed “safety and soundness” concerns for banks and would raise the cost of credit. Then this week, the Treasury Department, relying heavily on a discredited claim that plaintiff attorneys routinely shake down corporations with meritless claims, published a 17-page report attacking the CFPB rule.
The attacks from Trump’s executive agencies on a fellow regulator gave Senators the cover they needed to side with Wells Fargo and Equifax over their customers. The Senate first tried to sneak in a vote on the resolution when the political world was distracted by the health care debate, but that didn’t work. It took shifting the framing of the rule from being about victims to being about trial lawyers for Senate Republicans to succeed.
Supporters of the CFPB rule like Public Citizen’s Robert Weissman called the vote a choice “between corporate donors and constituents.” Amanda Werner, who gained notoriety for dressing as the Monopoly Man during Senate hearings on Wells Fargo and Equifax, notes that lawmakers opposing the arbitration rule received over $100 million in campaign contributions from the financial industry during their careers. “These contributions help explain why lawmakers are willing to aid and abet big banks in ripping off their own constituents despite overwhelming bipartisan support for the rule,” Werner said in a statement to The Intercept.
Conservative groups like the Heritage Foundation made the resolution a “key vote” on its legislative scorecard, something Republicans pay a lot of attention to. That helped bring wavering senators on board.
AFTER DAY OF FEUDING, JEFF FLAKE AND BOB CORKER JOIN TRUMP TO UPEND A MAJOR CONSUMER PROTECTION [David Dayen/The Intercept]